Management Agreement, dated as of April 14, 2006, by and between Xethanol Corporation and H2Diesel, Inc. MANAGEMENT SERVICES AGREEMENT
Exhibit
1.3
Management
Agreement, dated as of April 14, 2006, by and between Xethanol Corporation
and
H2Diesel, Inc.
This
Management Services Agreement ("Agreement") is made and entered into as of
this
14th
day of
April 2006 by and between H2Diesel, Inc., a Delaware corporation (the "Company")
and Xethanol Inc., a Delaware corporation (the "Manager").
WHEREAS,
the Company is in the business of exploiting and sub-licensing bio-fuel
technology (the “Business”);
WHEREAS,
the parties have entered into an Investment Agreement dated as of April 14,
2006
pursuant to which in consideration of One Million Three Hundred Thousand
(1,300,000) shares of the Company’s common stock, the Manager has agreed to
provide administrative, management, and consulting services to the Company
in
connection with the Business (the "Management Services" as further defined
below).
NOW,
THEREFORE, in consideration of the mutual promises and covenants contained
in
this Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties, intending to be
legally bound by this Agreement, agree as follows:
1. Scope
of the Agreement.
1.1 Generally.
Throughout the Term (as defined in Section 3) of this Agreement, the Manager
shall have responsibility and authority for the administration of the day-to-day
management of the Business of the Company ("Management Services"). The
Management Services shall include the following, which may be amended or
expanded from time to time by written agreement of the parties:
(a) coordination
in procuring capital equipment and the financing thereof with respect to the
Business;
(b) assist
the Company in preparing annual capital and operating budgets on or before
December 31 of each year;
(c) assist
the Company in the coordination of advertising, promotional, public relations
and other marketing of the services performed by the Business;
(d) advise
the Company with respect to business and marketing strategy, business expansion,
changes in product or service offerings, and capital expenditures and other
budgetary matters.
(e) develop
long-term strategic planning objectives;
(f) assist
the Company in obtaining loans, leases and other financing for the benefit
of
the Company;
(g) financial
management, including causing annual financial statements to be prepared for
the
Company by a local or regional certified public accounting firm selected by
Manager, and preparation of cost reports and tax returns on a timely
basis;
(h) assist
the Company with bookkeeping, accounting, data processing and other computer
based information services;
(i) materials
management, including purchasing and stocking of office and medical supplies
and, if and as necessary, pharmaceuticals, and maintenance of equipment and
facilities;
(j) human
resources management, including recruitment, hiring, training, supervising,
monitoring, disciplining and terminating of personnel necessary for the
Business;
(k) implementation
and management of utilization, cost and quality management systems;
(n) reviewing
and assistance in implementing, and supporting relevant policies, protocols
and
guidelines for the Business;
(o) arranging
for and directing necessary legal services and the commencement or settlement
of
any legal action, dispute or claim; except with respect to any legal dispute
between the Company and the Manager;
(r) assist
the Company with the application for and maintenance of all licenses and
regulatory approvals needed by the Company, including, without limitation,
preparation and submission of all forms and applications, tax identification
and
provides numbers and oversight, advising and assisting the Company in achieving
and maintaining regulatory compliance, communication with regulatory
authorities, and overseeing all regulatory surveys/inspections.
The
Company shall cooperate with the Manager in the performance of such services
in
all such respects as the Manager may reasonably request, and shall provide
the
Manger with all financial, personnel, facilities and equipment as are reasonably
necessary, for the performance of such services.
1.3 Applicable
Law.
The
Manager shall use its best efforts to comply with all applicable federal and
state laws, statutes, rules and regulations, including applicable governmental
rules or guidelines in connection with the rendering of its services under
this
Agreement..
2. Management
Fee.
2.1 Compensation.
In
consideration of One Million Three Hundred Thousand (1,300,000) shares of the
Company’s common stock, which has already been delivered to the Manager pursuant
to a separate agreement, the Manager has agreed to provide the Management
Services hereunder.
2.2 Company
Account.
The
Company shall establish and control a bank account ("Company Account"). The
Company agrees to appoint the Manager as the Company's true and lawful agent
and
attorney-in-fact, and grants the Manager a special limited power of attorney,
and the Manager hereby accepts such special limited power of attorney and
appointment to collect and deposit all funds, fees and revenues generated by
the
Company and the Business into the Bank Account. The Company shall be entitled
to
revoke such special limited power of attorney for the Manager at any time for
any reason.
The
Company shall execute documents required by the bank where the Company Account
is held (the “Bank”) to effectuate the foregoing power of attorney.
3. Term.
3.1 Term.
The
Term of this Agreement shall be one (1) year commencing on the effective date
of
this Agreement and ending 365 days after the initial date of this Agreement
(the
"Term"), unless earlier terminated pursuant to this Section 3. The Term shall
automatically renew for additional one (1) year periods ("Renewal Term")
provided neither party is in default under this Agreement and neither the
Company nor the Manager have given notice of termination in accordance with
Section 3.
3.2 Termination
by Either Party.
Either
party may terminate this Agreement:
3.2.1 Breach.
If the
other party breaches this Agreement and such breach is not cured to the
reasonable satisfaction of the nonbreaching party within thirty (30) days after
the receipt of written notice of the default (the "Default Notice"), or in
the
case of a breach which cannot be cured within such time period, the breaching
party has not made a good faith effort to attempt to cure such default within
such time period.
3.2.3 Bankruptcy
or Cessation of Business.
Upon
the occurrence of any of the following events with regard to the other party:
(a) the making of a general assignment for the benefit of creditors;
(b) the
filing of a voluntary petition or the commencement of any proceeding by either
party for any relief under any bankruptcy or insolvency laws, or any laws
relating to the relief of debtors, readjustment of indebtedness, reorganization,
composition or extension; (c) the filing of any involuntary petition or the
commencement of any proceeding by or against either party for any relief under
any bankruptcy or insolvency laws, or any laws relating to the relief of
debtors, readjustment of indebtedness, reorganization, composition or extension,
which such petition or proceeding is not dismissed within sixty (60) days of
the
date on which it is filed or commenced; or (d) suspension
of the transaction of the usual business of either party for a period in excess
of sixty (60) days.
3.2.4 At-Will
Termination.
Company
may terminate this Agreement at any time, with or without cause, by giving
the
Manager not less than thirty (30) days' prior written notice. The Manager may
terminate this Agreement with or without cause, at the end of the initial Term
by giving the Company not less than one hundred eighty (100) days' prior written
notice of its intent to terminate the Agreement at the end of the
Term.
3.2.5 Immediate
Termination By Company.
The
Company may terminate this Agreement immediately upon written notice to the
Manager in the event of any termination or breach (after any cure period) by
the
Manager, for any reason, of any written agreement between the Manager and the
Company.
3.2.6 Termination
Upon Mutual Agreement.
The
parties may terminate this Agreement at any time upon execution of a writing
signed by all parties.
3.2.7 Effect
of
Termination. No termination of this Agreement by either party, whether with
or
without cause, shall affect or reduce the compensation payable to the Manager
under this Agreement.
4. Books
and Records.
4.1 Ownership
of Records.
All
business records and information relating to the business and activities of
either party shall be the property of that party, irrespective of identity
of
the party responsible for producing or maintaining such records and
information.
4.2 Records.
During
the Term of this Agreement, the Manager shall keep correct and complete records
of accounts, financial transactions, and all other matters relating to the
Company and the Business as required under Section 1.1, and the Company shall
have access to such records at all times.
5. Indemnification.
5.1 Generally.
Except
to the extent paid from the proceeds of available insurance policies, each
party
(and it affiliates) agrees to indemnify and hold harmless the other party (and
its affiliates) against any loss, cost, suit, claim, action, cause of action,
damage, obligation, contract, demand, liability, judgment, verdict, settlement
or expense (including reasonable attorneys' fees and court costs) arising out
of
any act or omission of the indemnifying party, its employees, attorneys, agents,
or affiliates (the “Indemnified Party”) that occurs in connection with this
Agreement.
5.2 Notice
of Claims, Etc.
Upon
obtaining knowledge of facts causing it to believe that it has or will have
a
claim for indemnification against the other party under this Agreement such
party the Indemnified Party shall promptly give the other party (the
"Indemnifying Party") written notice of such claim. The Indemnifying Party
shall
have thirty (30) days from the receipt of such notice (the "Defense Notice
Period") to notify the Indemnified Party whether or not it desires to defend
the
Indemnified Party against such claim or demand. All costs and expenses incurred
by the Indemnifying Party in defending such claim or demand shall be a liability
of, and shall be paid by, the Indemnifying Party. In the event that the
Indemnifying Party notifies the Indemnified Party during the Defense Notice
Period that it desires to defend the Indemnified Party against such claim or
demand then, except as hereinafter provided, the Indemnifying Party shall have
the right to defend the Indemnified Party by appropriate proceedings using
legal
counsel reasonably satisfactory to the Indemnified Party. Notwithstanding the
foregoing, the Indemnifying Party shall not, without the prior written consent
of the Indemnified Party, settle, compromise or offer to settle or compromise
any such claim or demand on a basis that would result in the imposition of
a
consent order, injunction, decree or agreement that would restrict or affect
the
future activity or conduct of the Indemnified Party. The Indemnified Party
may
participate in, but not control, any such defense or settlement at its sole
cost
and expense.
6. Miscellaneous.
6.1 Dispute
Resolution.
6.1.1 In
the
event of a dispute between the parties arising out of, or relating to this
Agreement, its interpretation or performance hereunder, the parties shall exert
their commercially reasonable efforts to resolve the dispute amicably through
negotiations.
6.1.2 The
validity, construction, and interpretation of this Agreement and all purchase
orders issued hereunder shall be solely and exclusively governed by and
construed in accordance with the laws of the State of New York, USA, excluding
any otherwise applicable rules of conflict of laws.
6.1.3 The
courts of the state of New York shall have sole and exclusive jurisdiction
over
the parties and subject matter of this Agreement. For implementation of this
Agreement and all its consequences, each party waives such of its rights and
privileges under any other law or legal system, such as the law of the place
of
performance, as is necessary to give effect to the term and conditions hereof.
Each party hereby expressly consents to personal jurisdiction in New York,
and
expressly waives any right to object to such personal jurisdiction, or the
convenience of such forum.
6.2 Status
of Parties.
In the
performance of all work, duties and obligations under this Agreement, it is
mutually understood and agreed that each party is at all times acting and
performing as an independent contractor with respect to the other. Each party
shall be solely responsible for and shall comply with all state and federal
law
pertaining to employment taxes, income withholding, unemployment compensation
contribution and other employment related statutes applicable to that party,
provided that the Manager shall be responsible for administering and taking
all
reasonable steps necessary or appropriate for the performance of such items
of
the Company.
6.3 Force
Majeure.
Neither
party shall be deemed to be in default of this Agreement if such party is
prevented from performing any obligation hereunder for any reason beyond its
control, including but not limited to, Acts of God, war, civil commotion, fire,
flood or casualty, labor difficulties, shortages of or inability to obtain
labor, materials or equipment, governmental regulations or restrictions, changes
in applicable law, denial or loss of Medicare or Medicaid or other government
certification, or unusually severe weather. In any such case, the parties agree
to negotiate in good faith with the goal of preserving this Agreement and the
respective rights and obligations of the parties hereunder, to the extent
reasonably practicable. It is agreed that for purposes of this Agreement
financial inability shall not be deemed to be a matter beyond a party's
reasonable control.
6.4 Notices.
Any
notice, demand, approval, consent or other communication to be given hereunder
by either party to the other shall be deemed to be received by the intended
recipient (a) when delivered personally, (b) the day following delivery to
a
nationally recognized overnight courier service with proof of delivery, (c)
by
facsimile or e-mail transmission provided such is substantiated by personal
or
mail delivery, or (d) three (3) days after mailing by certified mail, postage
prepaid with return receipt requested, in each case addressed to the parties
as
set forth below:
| If to the Company: | H2Diesel, Inc.
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▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇ ▇▇▇▇▇, CEO
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
|
| If to the Manager: |
Xethanol, Inc.
1185
Avenue of the ▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇
▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
▇▇▇▇▇▇▇▇▇▇▇ ▇'▇▇▇▇▇▇-▇▇▇▇▇▇, CEO
Telephone:
(▇▇▇) ▇▇▇-▇▇▇▇
Facsimile:
(▇▇▇)
▇▇▇-▇▇▇▇
|
Any
party
may change the address for notice by notifying the other party, in writing,
of
the new address.
6.5 Entire
Agreement.
This
Agreement supersedes any and all other agreements, either oral or in writing,
between the parties hereto with respect to the subject matter of this Agreement.
This Agreement may not be changed orally, and may only be amended by an
agreement in writing signed by both parties.
6.6 No
Rights in Third Parties.
This
Agreement is not intended to, nor shall it be construed to, create any rights
in
any third parties (other than any Indemnified Parties).
6.7 Governing
Law.
This
Agreement shall be governed by and construed in accordance with the laws of
the
State of New York, USA.
6.8 Severability.
If any
provision of this Agreement shall be held by a court or administrative agency
of
competent jurisdiction to be contrary to law that provision will be enforced
to
the maximum extent permissible, and the remaining provisions of this Agreement
will remain in full force and effect, unless to do so would result in either
party not receiving the benefits of its bargain.
6.9 Rights
Unaffected.
No
amendment, supplement or termination of this Agreement shall affect or impair
any rights or obligations that had previously matured under this
Agreement.
6.10 Successors.
This
Agreement shall be binding upon and shall inure to the benefit of the parties,
their respective heirs, executors, administrators and assigns.
6.11 Further
Actions.
Each of
the parties hereto agrees that it shall hereafter execute and deliver such
additional instruments and undertake such additional acts as may be required
or
useful to carry out the intent and purpose of this Agreement and as are not
inconsistent with the terms hereof.
6.12 Compliance
with Law.
The
parties shall (a) cooperate with one another in the fulfillment of their
respective obligations under this Agreement, and (b) comply with the
requirements of law and with all ordinances, statutes, regulations, directives,
orders, or other lawful enactments or pronouncements of any federal, state,
municipal, local or other lawful authority applicable to the
Business.
6.13 Non-Assignment.
The
Manager may not assign this Agreement except with the prior written approval
of
the Company.
6.14 Counterparts.
This
Agreement may be executed in one or more counterparts, each of which shall
constitute an original Agreement but all of which together shall constitute
one
and the same instrument.
6.15 Confidentiality.
Except
for disclosure to its attorneys, accountants, bankers, underwriters or lenders,
or as necessary or desirable for conduct of business, neither party hereto
shall
disseminate or release to any third party any information regarding any
provision of this Agreement, or any financial information regarding the other
(past, present or future) that was obtained by the other in the course of
negotiation of this Agreement or in the course of the performance of this
Agreement, without the other party's written approval; provided, however, the
foregoing shall not apply to information which (i) is generally available to
the
public other than as a result of a breach of any confidentiality provisions,
(ii) becomes available on a non-confidential basis from a source other than
the
other party, or its affiliates or agents, which source was not itself bound
by a
confidentiality agreement, or (iii) which is required to be disclosed by law,
including securities laws, or pursuant to court order.
6.17 No
Waiver.
No delay
or failure to exercise any right, power, or remedy accruing to either party
upon
breach or default under this Agreement shall be deemed a waiver of any prior
or
subsequent breach or default of this Agreement, nor affect the validity of
any
provision of this Agreement.
IN
WITNESS WHEREOF, the parties have caused their authorized representatives to
execute this Agreement as of the date first above written.
H2Diesel,
Inc.
By:
/s/ ▇▇▇ ▇▇▇▇▇
By:
▇▇▇
▇▇▇▇▇, CEO
Xethanol,
Inc.
By:
/s/ ▇▇▇▇▇▇▇▇▇▇▇
▇'▇▇▇▇▇▇-▇▇▇▇▇▇
By:
▇▇▇▇▇▇▇▇▇▇▇
▇'▇▇▇▇▇▇-▇▇▇▇▇▇,
CEO